The Governor of the Bank of Israel, Dr. David Klein, today met with a group representing investment banks and brokers from abroad, mainly from London and New York, who participated in a visit to Israel organized by the Israel representative of the Union Bank of Switzerland.

In the course of the meeting the investors expressed interest in developments regarding the budget deficit and the government debt, rates of interest in Israel, the foreign-currency market and the exchange rate, macroeconomic policy in the light of political developments, and forecasts of growth in Israel in 2003 and 2004.

The Governor explained that after the approval of the emergency economic package by the government and the Knesset, against the background of signs of improvement in the political and security situation and the slow economic recovery worldwide, the conditions now exist for an improvement in Israel's economic situation. The Governor outlined the main points of the government's economic package relating to the budget, infrastructure investment, and the policy of reducing the number of foreign workers. The Governor emphasized the structural reforms incorporated in the economic program, and expressed the opinion that their implementation would enable the improvement in the competitive structure of the economy to continue in other areas too. Against this backdrop the Governor assessed that if the economic package is implemented in its entirety, together with a return to a declining deficit and debt/GDP ratio, the downward trend in interest rates for all terms is likely to continue, and the economy will probably revert to a path of positive growth.